Island Def Jam's surprise exclusive release of Frank Ocean's "Channel Orange" album for one week on iTunes is still angering other retailers. A week after Target refused to carry the album as a result of the digital exclusive, Amazon on July 16 started selling an MP3 version of the album for $2.99 - a move reminding music buyers that if they see an iTunes exclusive, they should check Amazon's price before downloading from Apple.
Amazon's lowballing is the latest twist in the ongoing tug of war between labels and retailers to drive volume sales at the expense of pricing. But after all is said and done, the price wars could create more confusion among consumers. Christian Clancy, Ocean's manager and co-founder of 4 Strikes Management, says, "Frank gives us the opportunity to see some of the business practices that need to evolve."
One major-label sales executive put it more bluntly: "[Amazon is] punishing the artist and the label in a pretty sneaky and clever way. They are also definitely sending a message to other labels that giving iTunes an exclusive will have consequences."
The blowback for iTunes preferential treatment is felt deeply on the Billboard charts. Billboard's revised policy, instituted after Lady Gaga's "Born This Way" was priced for 99 cents on Amazon to boost first-week sales, excludes sales of titles scanned for less than $3.49 within the first four weeks of release.
Sources say that the Amazon sale will generate about 15,000 album downloads at the Seattle-based merchant this week.
Last week, when iTunes had the album exclusively, it scanned 127,000 units. This week, iTunes was projected to sell about 30,000. But those projections were made before the Amazon price point was known.
While some Island Def Jam executives might feel cheated that all the Amazon sales won't count toward its chart position, others say that it should only feel slighted at the 2,000-4,000 units that the title was projected to scan this week at Amazon, before the price point was known.
Amazon declined comment, but the merchant has previously stated that customers should be able to choose where they can buy an album, something that conflicts with the concept of an exclusive.
Moreover, Amazon's $2.99 tag could be more about presenting its customers with an attractive price point on a popular title to highlight its everyday, low-pricing strategy, rather than an attempt to deliberately sabotage an album so its sales won't count on the Billboard 200.
Providing exclusive superior album versions or exclusive windows to sell a title often spurs battles between labels and retailers. Merchants argue that exclusives don't generate much in incremental sales-all it does is give preferential treatment to one account at the expense of others by shifting sales. Other merchants say that as much as they're miffed about exclusives and would like to punish the label and artist, they don't want to punish their customers by boycotting the title. Instead, they might not feature the title in prime real estate.
When a label gives an exclusive version or window on a title to a chain, it's common courtesy to let other accounts know in advance so they can adjust their orders accordingly.
Labels sometimes try subterfuge, pretending their exclusive was a last-minute deal spurred by fears that a leak would allow potential customers to obtain pirated copies of the album and thus hurt sales. The last time it offered an exclusive, Island Def Jam gave other merchants a heads up on its preferential treatment to iTunes and Best Buy for Kanye West and Jay-Z's "Watch the Throne," but the label still caught grief from retail.
The same thing seems to have happened with Ocean. "They didn't give us a heads up on the iTunes exclusive, and when it happened they claimed it was because of a leak," says a head of purchasing at one major chain. "But we know it was all bullshit because we've seen on the news how it was planned from the beginning. This is the same label that engineered the Kanye West and Jay-Z exclusive at iTunes. I think we're seeing a pattern [emerge]."
Clancy confirmed the iTunes release and its announcement on "Late Night With Jimmy Fallon" "was always Frank's plan from the jump." Target opted not to take its order of 20,000 units of "Channel Orange," telling Billboard in a statement, "Our selection of new releases is dedicated to physical CDs rather than titles that are released digitally in advance of the street date."